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Promotion and Formation of company - Coggle Diagram
Promotion and Formation of company
PROMOTION OF A COMPANY
The term Promotion means all those steps that are required to bring a company into existence
A PROMOTER [Section 2(69)]
Who has been named as such in a prospectus or is identified by the company in the annual return as a promoter
Who has control over the affairs of the company
In accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act
Duties of Promoters
Not to make secret profits
Disclosure of material facts
To compensate for losses of company
Not to use position unfairly
To act diligently
ACTIONS AGAINST THE PROMOTERS
a) Rescind the contract and recover the purchase price where the promoter sold his own property to the Company.
b) Recover the secret profits made by the promoters.
c) Sue the promoters for breach of trust.
RIGHT OF PROMOTERS
To claim promotional expenses & remuneration for his services.
Entitled to recover his preliminary expenses.
To receive all the expenses incurred for in setting up and registering the company, from Board of Directors.
REMUNERATION TO PROMOTERS
Receive the remuneration that the Company has contracted to pay.
Recover the expenses properly incurred by them for incorporation of the Company
INCORPORATOIN OF A COMPANY
Company other than sec-8
Co. having subscribers upto 7
INC-32+INC-33+INC-34+INC-8 (Declaration by PCS+INC 9 (by 1st director declaration)
Co. having more than 7 subscribers
INC 32 (SPICE)+Physical format of MOA+Physical format of AOA
Sec-8
INC 32 (SPICE)+INC 13 (MOA)+INC 31 (AOA)
INC 32 (SPICE)
Name availability (RUN)
DIR-3
DIR-12
Appointment of directors
INC-22
Intimation of R.O of co. or Change of R.O
Companies (Incorporation) Rules, 2014.
Reservation of Name
an application shall be made through the web service available at www.mca.gov.in by using RUN along with prescribed fees which may be approved or rejected by ROC
Rule 12: Application for incorporation of company shall be made in INC 32 (SPICe)
Rule 25A: Active Company Tagging identities and verification (ACTIVE) INC 22A
Rule 38 Simplified Proforma for Incorporating Company Electronically (SPICe).-
Rule 38A: Application for Registration of GSTIN, ESIC, EPFO & PTR & Opening of Bank Account
STEPS OF INCORPORATION OF A COMPANY
1) MOA and AOA duly signed by subscribers in prescribed manner
2) Declaration by practicing CS/CA/CMA/Adv
3) Declaration by Subscribers & First Directors
4) Address for Correspondence
5) Particulars of every subscriber to the Memorandum
6) Other relevant particulars
ROC shall register all the documents and shall issue a Certificate of Incorporation in INC 11.
Details of CIN
1st digit
Listing status
If the company is listed it will start with “L” and if the company is unlisted it will start with “U”
Next 5 digits
Industry code
Next 2 digits
State code
Eg. MH for Maharashtra
Next 4 digits
Year of incorporation
i.e. A company formed in the calendar year 2011 , it will be 2011
Next 3 digits
Ownership
PLC for Public Limited Company PTC for Private Limited Company OPC for One Person Company
Next 6 digits
Registration No.
Eg. 090868
Commencement of Business Sec 10 A (02/11/18)
Any co. having S.C. shall not commence any business or exercise borrowing powers unless
a) A declaration is filed by its directors within 180 days from DOI in prescribed form and verified to ROC, that each subscriber to MOA has paid value of shares agreed to be taken.
b) Co. has filed verification of Registered office.
In case of default, Penalty on company = Rs. 50,000 and officer in default = Rs. 1000 for each day in default and up-to Rs. 1,00,000.
If no such declaration filed to ROC within 180 days and ROC has reasonable cause to believe that co is not carrying any business/ operation, he may initiate removal of Name of company.
EFFECT OF CERTIFICATE OF INCORPORATION
1) From the date of incorporation mentioned in the certificate of incorporation, such subscribers to the memorandum and all other persons, as may, from time to time, become members of the company.
2) It shall be a body corporate.
3) It shall exercise all the functions of an incorporated company
4) Upon incorporation, the Company becomes a legal person separate from its members.
5) It acquires perpetual succession and common seal.
6) It shall have power to acquire, hold and dispose of property, both movable and immovable, tangible and intangible.
7) It shall have power to contract and to sue and be sued, by the said name.
MEANING OF CERTIFICATE OF INCORPORATION
A certificate which certifies that the company is registered is called „Certificate of Incorporation‟. It is issued by the ROC
It contains the name of the company, the date of it issue and the signature of Registrar with his seal.
The Company comes into existence from the date of the certificate of incorporation
After scrutinizing the documents filed with the ROC, and after being satisfied that all the requirements have been fulfilled
CERTIFICATE OF INCORPORATION IS A CONCLUSIVE EVIDENCE
Thus, the certificate is conclusive evidence on the following points
All the requirements under the Act have been complied with in respect of registration of Company and matters precedent and incidental thereto
The association is a Company, authorized to be registered and duly registered under this Act
Thus, if Memorandum of Association is
Materially altered after signature but before registration, or
Signed by only 1 person for all 7 subscribers
If signatories are all minors
If all or some of the signatures on the Memorandum and Articles are forged
Contains illegal objects
PRELIMINARY CONTRACTS
A pre-incorporation contract means a contract entered into by the promoters on behalf of the
Company before its incorporation
CONDITIONS FOR ENFORCEMENT OF PRELIMINARY CONTRACTS
i. The contracts were entered into by promoters before incorporation of the company
ii. The contracts were entered in to on behalf of Proposed Company
iii. Such contracts are warranted by the terms of its incorporation.
iv. The Company has adopted such contract after incorporation and has communicated the same to
the other party.
v. The company has entered into a fresh contract with the third parties on the same terms and
conditions as contract entered into by the promoters
EFFECTS WHEN COMPANY ADOPTS PRE-INCORPORATION CONTRACTS
i. The contracts can be enforced by the company
ii. The contract becomes binding on the company
iii. The promoters are not personally liable on such a contract.
EFFECTS WHEN COMPANY DOES NOT ADOPT PRE INCORPORATION
CONTRACTS
i. The pre-incorporation contract shall not bind the company
ii. Even if the contract stipulates that the company after incorporation shall be bound by it, the
company shall not be bound by such contract.
iii. Even if the company takes the benefit of pre-incorporation contract, it is not bound by it
iv. The company cannot ratify a pre-incorporation contract.
v. The Company, after incorporation, cannot enforce a pre=incorporation contract
vi. The promoters are personally liable on pre-incorporation contract